British Gas owner Centrica is this week expected to report a 26pc leap in
earnings for its household electricity and gas supply business.

British Gas owner Centrica will reignite debate over energy company profits on Thursday when it is expected to report a 26pc leap in earnings for its household electricity and gas supply business.

Analysts expect British Gas Residential – which supplies energy to about 10 million households – to generate £352m in operating profits in the first half of the year – up from £280m in the same period of 2011.

Adjusted operating profits for the entire group – which includes energy supplies to UK businesses and North American customers as well as oil and gas exploration and production - are expected to have risen 15pc, to £1.45bn.

British Gas’s Business division – supplying energy to small and mid-sized businesses – is forecast to buck the upward trend, falling 17pc to £106m. Tough economic conditions are expected to have reduced customer numbers and usage, as some businesses go bust and trade slows.

Centrica and the other big energy suppliers have come under fire for their profits at a time when hard-pressed customers have struggled to pay rising energy bills.

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The company is expected to explain that the leap in its domestic supply business is due to the fact the division performed poorly in the first half of 2011. British Gas Residential was loss-making from April to June 2011 as customers turned their heating off in the unusually warm weather.

Analysts expect that 2012’s colder weather patterns have averaged out to see energy usage rebound to a more typical level, explaining the rise in profits.

“The winter months are usually the key ones, and January and February were unseasonably mild,” analysts at Investec said. “However, April was cold and wet, and May and June also featured relatively poor weather. Taking all of this together, the total H1 2012 consumption has probably ended up at long-term average levels.”

Full-year profits are expected to be broadly similar to 2011’s profits, with a greater proportion coming from the first half.

Amid political and consumer group pressure over energy bills, Centrica and other suppliers have been moving to increase transparency about how costs are apportioned. They hope to highlight the role of rising commodity costs and Government-imposed green and social levies in pushing up bill costs.

British Gas has recently begun sending out a new style of bill to its domestic energy customers which shows that about 5pc of a typical bill comprises profits for Centrica. While public debate is likely to focus on profits, investors will also be looking for updates on the company’s plans in its oil and gas and energy generation businesses. The company has a 20pc option in the EDF-led project to build new nuclear power plants at Hinkley Point in Somerset, but many in the industry doubt that it will utilise the option.

Centrica has repeatedly said it will only invest if it sees a strong strategic fit and attractive returns. Analysts believe the investment would serve little strategic purpose for Centrica, while spiralling project costs and an uncertain regulatory framework may make it even less appealing.

At its full-year results in February, Centrica’s finance director, Nick Luff, warned that an “awful lot” needed to happen if the company were to take an investment decision this year as scheduled, and that “not all of those things may happen in time”.